By MEDevelopment,Inc. – ADU Builders | Lic#992342
1. Cash-Out Refinance
A cash-out refinance lets you replace your existing mortgage with a new, larger one—and pull out the difference as cash.
– Great for: homeowners with significant home equity
– Pros: lower rates than personal loans, high borrowing limits
– Cons: resets your mortgage term
According to Freddie Mac, cash-out refinances are a popular option for ADU financing in high-equity areas like LA (freddiemac.com).
2. Home Equity Line of Credit (HELOC)
A HELOC works like a credit card secured by your home—flexible and interest-only during the draw period.
– Great for: phased construction
– Pros: borrow only what you need, lower interest than credit cards
– Cons: variable rates, requires good credit and equity
California lenders increasingly offer HELOCs marketed specifically for ADU construction (Bankrate.com).
3. Renovation Loans: FHA 203(k) & Fannie Mae Homestyle
These loans combine the cost of a home and renovations—including ADUs—into one mortgage.
– FHA 203(k): 3.5% down for eligible borrowers
– Fannie Mae Homestyle: More flexible, allows detached ADUs
Be sure to verify ADU eligibility with your lender—MEDevelopment,Inc. – ADU Builders can help you review options (HUD.gov).
4. Grants & Incentives for ADUs
– CalHFA ADU Grant (past rounds): Up to $40,000 for predevelopment costs like plans, permits, energy compliance, and soil testing
– LA ADU Accelerator: Matches homeowners with seniors and provides rent guarantees
The CalHFA ADU Grant is currently paused, but expected to reopen. Bookmark the page and stay alert for new rounds (CalHFA.gov, housing.lacity.org).
5. ADU Construction Loans
For larger ADU projects, a construction loan offers funds disbursed in stages.
– Interest-only during construction
– Converts into permanent mortgage at completion
– Often requires architectural plans and contractor bids
As licensed contractors, MEDevelopment,Inc. – ADU Builders can provide everything your lender needs to approve construction financing.
6. Personal Loans or Lines of Credit
Unsecured loans are fast to approve but often carry higher interest rates.
– Good for: small ADU projects like garage conversions
– Pros: no equity required
– Cons: higher monthly payments and shorter terms
Use this method cautiously—only for smaller builds or when equity-based lending isn’t available (NerdWallet.com).
7. Green Financing (PACE/HERO)
If your ADU will include energy upgrades (solar, insulation, low-flow plumbing), you may qualify for PACE financing.
– Repaid through your property tax bill
– Available for energy-efficient components
– Must be used for qualifying green improvements
Always verify program terms carefully—MEDevelopment,Inc. – ADU Builders can assist during design (CSCDA.org).
Typical ADU Construction Costs in LA
– Garage Conversion: $90,000 – $150,000
– Detached ADU (500–1,200sf): $180,000 – $350,000+
– Two-Story ADU Addition: $200,000 – $400,000+
Every property is different. We offer free site reviews and project estimates.
Why Homeowners Trust MEDevelopment,Inc. – ADU Builders
We’re more than just a licensed general contractor—we’re a full-service ADU partner. Serving West LA, Beverlywood, Mar Vista, Mid City, and Culver City, we provide:
– Design & engineering
– Permit & zoning guidance
– ADU lender referrals
– Transparent timelines and pricing
– Full construction management
Start Your ADU Journey Today
Contact MEDevelopment,Inc. – ADU Builders to explore your financing options, schedule a site review, and get expert support from the ground up.
Call us or visit: https://medevelopmentinc.com
References
– Freddie Mac: https://www.freddiemac.com
– CalHFA ADU Grant: https://www.calhfa.ca.gov/adu/
– HUD FHA 203(k): https://www.hud.gov/program_offices/housing/sfh/203k
– LA Housing ADU Program: https://housing.lacity.org/adu/
– Bankrate: https://www.bankrate.com/home-equity/heloc-accessory-dwelling-units/
– NerdWallet: https://www.nerdwallet.com/best/loans/personal-loans/home-improvement
– CSCDA PACE: https://cscda.org/PACE/